Ford's hot hatchback has Volkswagen playing catch-up

By Craig TrudellBloomberg News

Monday, May 13, 2013

SOUTHFIELD, Mich. — Stan Visnesky wanted to spice up his daily drive with a souped-up small hatchback. Rather than go for a more popular and pricey road rocket from Germany’s Volkswagen, Visnesky bought Ford Focus ST.

“It’s definitely a steal,” said Visnesky, 26, of Deptford, N.J. He paid $27,000 in December for his black Focus ST with racing seats and touch-screen controls. “For anything around the same specs, you’d be paying probably more than $30,000.”

Chief Executive Officer Alan Mulally had many triumphs to discuss Thursday at his seventh annual meeting at the helm of the No. 2 U.S. automaker. Ford is on a winning streak with its new Fusion mid-size sedan complementing the F-Series truck line. Now Dearborn-based Ford also is appealing to more young male buyers in a corner of the market ruled for the past 30 years by Volkswagen: racy little hatchbacks.

The Focus ST is helping Ford steal young, influential buyers from VW and Japanese automakers. Hot hatches attract auto enthusiasts who then act as brand ambassadors. These young buyers are sought after by carmakers because they have the power to elevate a brand’s image, including mainstream models, said Jeff Schuster, an analyst with researcher LMC Automotive in Troy. Sales of Ford’s entire Focus line rose 16 percent last month.

“You’re talking about an aspirational vehicle for someone entering the market,” Schuster said in a telephone interview.

The Focus ST hatchback, which churns out 252 horsepower behind its honeycomb-mesh trapezoidal grille, has been running at about 5 percent of total Focus sales, ahead of the 3 percent to 4 percent mix that the company expected, said Amy Marentic, global marketing manager for Ford cars.

In Europe, Focus ST was the top-selling hot hatch in 2012’s fourth quarter, beating Wolfsburg, Germany-based Volkswagen’s GTI, a juiced-up version of its Golf model, according to R.L. Polk & Co.

Top enthusiast publications from Britain’s Auto Express and Top Gear to Denmark’s Bilmagasinet and the U.S.’s Car and Driver are giving the nod to Focus ST over segment stalwart GTI. Car and Driver said in its November 2012 issue: “Allow us to dab a tear as our trusty friend suffers this defeat.”

“The GTI’s a great product, but we’re winning most of the comparisons, and we have more power,” Marentic said in a telephone interview.

Ford first showed the Focus ST at the 2010 Paris Motor Show as part of the introduction of the redesigned Focus compact car line, the first global product from Mulally’s so-called One Ford strategy. Implemented after his arrival from Boeing in 2006, the plan called for Ford to slash duplicative efforts such as engineering different cars for various global markets. For example, the previous generation Focus that Ford sold in the U.S. wasn’t the same car as the Focus model sold in Europe.

The moves by Mulally, 67, are paying dividends. Ford has earned $35.2 billion the past four years after losing $30.1 billion from 2006 through 2008. Ford now bills the Focus as the top-selling global nameplate, citing data from Southfield-based researcher Polk. Toyota, using different methodology, has disputed Ford’s assertion and said its Corolla is the best-seller.

In the U.S., Ford, General Motors and Chrysler, with their most competitive lineup from top to bottom in a generation, all gained market share in the first quarter for the first time in 20 years and exceeded analysts’ sales estimates last month, leading the industry to its best April since 2007.

Mulally’s global engineering approach allows Ford to load its cars with features. Rather than spending superfluously on engineering groups in Europe, the U.S. and Asia, one global team based mostly in Europe brought the Focus ST to life, said Jamal Hameedi, chief engineer for Ford’s Special Vehicle Team, known as SVT.

That allowed for the development of technology to amplify the roar of the Focus ST’s engine, an important attribute to the driving connoisseurs who buy hot hatches. A device known as an active sound symposer, a tube attached to the car’s intake manifold, uses an electronically controlled valve that opens and closes in response to engine speed and gear position. A similar system gives the Ford Mustang its throaty growl.

“That’s stuff that we never would have been able to afford in the prior business model,” Hameedi said. “We can hire a team of engineers to really deliver a very special sound inside the cabin and go into areas we never would’ve touched before.”

Ford was criticized by enthusiasts in the past for denying U.S. buyers its European performance cars or for watering them down by taking away essential features to keep prices low.

“When the new Focus came, it was a return to its European roots,” Don Sherman, technical director for Car and Driver, said in a telephone interview. “Ford got its act back together again, fortunately.”

Car and Driver’s November comparison test between Focus ST and Volkswagen GTI was one of the closest in the magazine’s history, Sherman said. The margin of victory was one point out of a potential 240 points.

“Even though the ST is the slightly larger and heavier hatch, it thumps the GTI’s agility with quicker, tighter steering,” the magazine said. “Considering how long and how well VW has raced slot cars, that’s a colossal achievement.”

VW isn’t rolling over. It’s boosting the power on a new version of the GTI debuting in the U.S. next year, the seventh generation of the model that arrived in 1983. It will have 258 pound-feet of torque, up from 207, and 210 horsepower, from 200.

“The new GTI takes the performance aspect to the next level, with having the most power ever,” Andres Valbuena, a Volkswagen product planning manager, said in a telephone interview. “It’s a lot more aggressive on the track or in the performance driving aspects, but it still keeps all the composure. That’s what really separates us.”

The U.S. is the GTI’s No. 1 market, said Valbuena, who has a 1992 GTI in his garage. It has remained a strong seller in the U.S. even as VW’s fortunes have waxed and waned. The company’s U.S. sales fell 4.5 percent last month and are up 3.7 percent this year to 180,146 vehicles. It is targeting 1 million annual sales in the U.S. by 2018, part of a plan to become the world’s top-selling automaker, surpassing GM and Toyota.

- Begin optional add end --Michael Comora, 16, a high school junior in suburban Fort Lauderdale, Fla., fits the profile of an aspirational buyer. His first car, bought in June, is a metallic blue GTI, with the car’s distinctive plaid seats.

“My dad writes the checks, but I did the negotiating and everything with the dealer,” Comora, a subscriber to Road & Track, Motor Trend and Car and Driver, said from his hot hatch last week after seeing Iron Man 3. “I first noticed the GTI was the kind of car I wanted when I was 11 or 12.”

New Focus ST owner Visnesky was sold by power and price.

“The GTI is comparable and it’s a nice, sporty-looking hot hatch, but it’s 50 less horsepower and it’s actually more expensive,” he said. “Winding roads are the best fun in it. Dropping it into second or third gear, it’s fun to get into that, just hear the turbo roar and just go.”